How might fuel prices be affected by the war in the Middle East?
UK petrol and diesel prices are rising because global oil prices jumped after the Middle East conflict began on 28 February 2026. This has been driven by supply-risk premiums, higher shipping/insurance costs and continued market speculation. Expect near-term volatility and a structurally higher diesel price sensitivity due to transport demand; for businesses this means focusing on fuel management tools and transparent pricing to limit margin impact.
Petrol prices and diesel prices are under pressure again. The tensions in the Middle East have been causing uncertainty in the global oil markets since the war began on 28th February and geopolitical unrest almost always translates into movement at the pump.
No matter your business or fleet size, fuel prices affect us all and this means one thing: costs can suddenly rise. But what is really going on? Why does the price of petrol and diesel rise in international conflicts? And what is the expectation for the coming months and years?
In this article, we analyse the short- and long-term effects on UK fuel prices, and what we might see next.
Why has the conflict in Iran caused fuel prices to rise?
The oil price is extremely sensitive to geopolitical tensions. This is because the Middle East plays a crucial role in global oil production and exports, with Iran having the 3rd largest oil reserves in the world.
Iran is strategically located on the Strait of Hormuz, it’s one of the most important oil passages in the world with about a fifth of the global oil trade passing through here. As soon as a threat arises around this region, financial markets react almost immediately.
Even if the physical supply of oil is not directly disrupted, the price often rises due to:
Expectations of supply problems;
Higher insurance costs for tankers;
Speculation on commodity markets;
Strategic stockpiling.
Crude oil is traded globally in US dollars, and UK petrol and diesel prices are directly influenced by movements in international oil markets. When geopolitical events increase the perceived risk of supply disruption, particularly in regions critical to global shipping routes or oil production, traders add a “risk premium” to crude prices. UK fuel retailers purchase refined fuel based on wholesale market rates, so when crude rises, wholesale costs increase, and pump prices typically follow within weeks. Exchange rates between the pound and the dollar can amplify or soften these movements.
This is reflected in the trading price of crude oil and, ultimately with a delay, in the petrol and diesel prices paid at UK forecourts.
Which factors impact the cost of fuel in the UK?
Fuel prices in the UK are made up of several key components:
The international oil price;
Refining and distribution costs;
Excise duties;
VAT (currently charged at 20%).
Fuel duty and VAT together make up a significant proportion of the final pump price. Because fuel duty is fixed per litre, and VAT is applied on top of the total cost, movements in crude oil prices are not passed on to drivers in a simple one-to-one way.
When the oil price rises for a long time, we almost always see that the petrol price and diesel price rise with it.
Short-term scenarios: rising diesel price in the event of escalation
UK pump prices do not usually react instantly to movements in crude oil markets. There is often a lag of several days, sometimes longer, as fuel already in the supply chain works its way through refineries, distributors and forecourts.
Escalation with disruption of oil exports
However, what we’ve seen so far as the situation has deteriorated and oil exports from the region are restricted:
The oil price has risen sharply, by 45%
We’ve seen a clear increase in the price of petrol but the full impact of the war won't be seen for a few weeks;
The diesel price often rises faster than petrol
Oil production has slowed or stopped entirely in the Middle East, prompting a G7 meeting to discuss releasing emergency stockpiles of oil
Why does the diesel price often rise faster? Diesel is used more intensively in transport, logistics and industry. With global uncertainty, the demand for transport security increases, which makes the diesel market extra sensitive.
For businesses with a (larger) fleet, this can have a direct impact on operational costs.
Long-term expectation: structurally higher fuel prices?
The question many businesses are asking: will the price of petrol remain high in 2026 and beyond? In the long term, more factors than just war play a role:
1. Energy transition
Investments in electrification are being made worldwide. At the same time, refining capacity in Europe is decreasing. Fewer refineries means less flexibility, and that can make the diesel price structurally more sensitive to shocks and wars.
As petrol and diesel fuels are non-renewable sources, fleet operators could consider the benefits of transitioning to electric vehicles at this time, though what impact the oil shortage will have on other markets is yet to be seen.
2. OPEC Production Policy (Organization of the Petroleum Exporting Countries)
Oil-producing countries are actively steering towards price levels. If geopolitical tensions coincide with production cuts, this could result in higher prices for a long time.
3. Dollar exchange rate
Oil is traded in dollars. A strong dollar makes fuel more expensive in Europe, even if the oil price remains stable.
4. UK excise duties
Taxes remain a determining factor in the final price of petrol. Any adjustments to excise policy can dampen or reinforce price increases.
Long term drivers
The probability of extreme peaks such as during geopolitical crises, such as the ongoing war between Russia and Ukraine, depends on actual disruptions. But structural uncertainty usually causes a higher price.
This means that large decreases in fuel prices are less likely than gradual increases with interim fluctuations.
Why does it matter to businesses?
For private motorists, an increase of a few pence is frustrating. For businesses, however, it can have a direct margin impact.
Even a small increase per litre can make a difference of thousands of pounds on an annual basis.
That’s why more and more companies are looking for ways to keep a grip on fuel costs, regardless of the current petrol price.
What businesses should do now
You cannot influence the oil price, however you can stay close to how much you’re spending by:
Gaining insight into your consumption
Having access to transparent pricing mechanisms
Efficient management of tank transactions
Administrative control
Many businesses therefore opt for solutions that allow them to access:
Daily prices
Pump prices
Central Invoicing
Clear reports
This helps to create predictability, even in a turbulent market.
Petrol price forecast 2026
Whilst it’s hard to make exact predictions multiple market indicators point to continued volatility, and thus fluctuating prices:
Geopolitical tensions remain structurally present
The energy transition is uneven
Global oil demand remains stable for the time being
The diesel price is likely to remain more sensitive to global economic activity and transport demand.
What does this mean for your business in concrete terms?
The most important conclusion: uncertainty is the new normal.
The petrol price and diesel price remain highly dependent on international developments. For all businesses, this means that fuel costs remain difficult to predict.
Therefore, strategic fuel management is becoming increasingly important. Not only to save costs, but to create financial peace in a volatile market.
Paul Holland, Managing Director of UK/ ANZ Fleet at Corpay, including UK brand, Allstar commented; “For UK fleets, the key issue is not just whether pump prices rise, but how volatile they may become in the weeks ahead.
“The next step for many businesses is practical. Monitor fuel data closely, review purchasing behaviour and make sure policies are doing the job. In periods like this, the organisations that stay closest to their fuel data are usually the ones that manage the cost shock best.”
Conclusion: fuel prices remain sensitive to geopolitics
The war in the Middle East has a direct impact on global oil markets. Even without physical disruption, the expectation of scarcity can cause the price of petrol and diesel to rise.
In the short term, we mainly see volatility. In the long term, a structurally low fuel price seems less likely.
Businesses should therefore look not only at the current pump price, but at structural control over fuel expenditure.
Need more control over your fuel costs?
Do you want to know how your business can gain more control over your fuel costs?
Stay up to date on with our daily average fuel price tool and find out the fuel price in your area. Find out how an Allstar card can help to stabilise fuel spend and how you can stay in control of costs with an Allstar card.
Why are UK petrol and diesel prices rising?
Will diesel rise faster than petrol?
What can businesses do to limit fuel cost shocks?
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